India Plans Phase-2 of Semiconductor Push
Reports suggest that the government would soon invite applications from semiconductor makers to set up shop in India under a new PLI scheme
Notwithstanding the criticisms heaped by opponents of the production-linked incentive (PLI) scheme, the federal government is going ahead with a new $10 billion incentive package for a second round of semiconductor manufacturing program. Readers would recall that the first round had seen five proposals being cleared under a similar program last February.
A published report in ET quoted unnamed sources to suggest that four global semiconductor makers were in advanced discussions with the government regarding setting up fabrication units in India. The names of NY-based Global Foundries and a large Korean semiconductor company have been doing the rounds in this regard.
The big guns are on India’s radar now
According to the report, the second round of applications would be sought somewhere in mid-March. In the past, India has stayed away from the semiconductor space given the complexity of the production process. However, the post-pandemic challenges presented by the Chinese supply chain, is what has prompted New Delhi to take it up now.
Globally, most of the semiconductor makers had set up shop in China over the years with Taiwan being another favored destination. However, officials in the government told us that the change in strategy came about on the realization that if India is to become a global player in the world of electronics, it had to bite the bullet and chase semiconductor manufacturing options.
The Vedanta-Foxconn issue is now resolved
Readers would recall that last year the Anil Agarwal-led Vedanta Group and Hon Hai Technologies (the name behind Foxconn) had signed a deal to create a joint venture that will manufacture semiconductors in India. An agreement was also signed with the Gujarat administration for investing Rs.1.54 lakh crore on the plant.
There were reports that the government wanted Vedanta to become a junior partner in the joint venture but now it appears that things have been sorted out with Akarsh Hebbar, the global MD of Display and Semiconductor Business at Vedanta, claiming that the company would hold 63% with the Taiwanese giant retaining 37%.
Is India late to get started on semiconductors?
Indications are that most top chipset makers such as TSMC, Intel and Samsung were interested in the idea of manufacturing in India, but had already committed massive investments to operations in other geographies. Which is why the government is offering a lure in the form of the PLI scheme, given that semiconductor production is a long-term game.
The article goes on to say that there are five applicants seeking to be part of the previous $10 billion package offered in December 2021, including three for chip making, and two others for display fabs. The names doing the round include the ISMC consortium led by New Orbit Ventures of Abu Dhabi, Singapore-based IGSS Ventures and the Foxconn-Vedanta one.
Questions have been raised about the ISMC venture which has Israel’s Tower Semiconductor in the equation. The Israeli company was acquired by Intel last February and the formalities of the buyout are yet to be completed. It may take a year for these to be over and the government is of the view to hold off on a decision till they’re over.
